INVESTMENT OBJECTIVE AND POLICY
The Company’s objective is to provide Shareholders with an attractive and growing level of income, together with the potential for capital growth, from investment in Songs and associated musical intellectual property rights, in accordance with its Investment Policy.
The Company’s investment policy is to diversify risk through investment in a Portfolio of Songs and associated musical intellectual property rights. The Company will seek to acquire 100 per cent. of a songwriter’s copyright interest in each Song, which would comprise their writer’s share, their publisher’s share and their performance rights.
In appropriate cases, however, the Company may not acquire all three elements of the songwriter’s interest. The Company will acquire interests in Songs which are sole authored or co-authored. The Company may also acquire interests in Songs jointly with another purchaser. Each Song will be considered by the Company to be a separate asset.
The Company will, directly or indirectly via portfolio administrators, enter into licensing agreements, under which the Company will receive payments attributable to the copyright interests in the Songs which it owns. Such payments may take the form of royalties, licence fees and/or advance payments, including:
- mechanical royalties – when a copy of a Song is made, whether physical (e.g. CDs, DVDs) or digital (e.g. permanent downloads, streaming, webcast);
- performance royalties – when a Song is performed live or broadcast on TV or Radio, or when a song is streamed online; and
- synchronisation fees – when a Song is used in another form of media (e.g. movie, TV show, video game, advertisement).
The Company will focus on delivering income growth and capital growth by pursuing efficiencies in the collection of payments and active management of the Songs it owns. The Company may acquire Songs for consideration consisting of cash, Shares or a combination of cash and Shares, and payment of part of the consideration may be on deferred terms. Whilst the Company does not intend to sell the Songs it owns, it may make disposals of Songs where it considers such a disposal to be in the best interests of Shareholders.
The Investment Adviser is responsible for identifying Catalogues for potential investment by the Company, in accordance with the Company’s Investment Policy and subject to approval by the Board. Pursuant to the Investment Advisory Agreement, the Investment Adviser will also be responsible for the ongoing management of Songs acquired by the Company with a view to increasing royalty income and collection as well as developing strategies to maximise the earning potential of a Song through improved placement and usage, and regular supervision of portfolio administrators and royalty collection agents, subject to the oversight of the Directors.
The Investment Adviser believes that a combination of its expertise in selecting and managing Songs and cooperation with Kobalt, as the Company’s preferred portfolio administrator, should enable attractive returns to be realised from the Songs the Company acquires. The Investment Adviser believes that the Company will have a competitive advantage over most of the major publishers because the Company will be advised by the Investment Adviser and its Advisory Board, a carefully assembled panel of leading music industry figures, from recording artists to songwriters, producers to managers, and lawyers to consultants, who the Investment Adviser believes are better placed to advise on any given Song’s potential market, reach and popularity. The Investment Adviser believes that its relationships are key to sourcing Catalogues and synch opportunities. The Investment Adviser’s Team will also have a lower ratio of Songs to each individual in the team managing the Songs, thereby, in the opinion of the Investment Adviser, allowing the Investment Adviser to target synchronisation opportunities more effectively.
The Investment Adviser is seeking to identify Catalogues which include Songs with the following characteristics:
- proven evergreen, delivering royalty income for numerous years;
- culturally influential and therefore likely to be continuously played and/or covered by new recording artists;
- under-exploited and for which the Investment Adviser has identified potential synch or cover opportunities; and
- offering upside from improving the administration of collection of the royalty income.
The Investment Adviser believes that its extensive experience across a broad spectrum of music genres, together with its relationships with songwriters and recording artists in the music industry, means it is well positioned to overcome the high barriers to entry and source opportunities for the Company to invest in a diverse range of attractive Catalogues and then assist the Company in maximising earnings from them.